Groupon may be once again falling back out of favor with investors. The stock was down 16 percent last night after delivering a second-quarter earnings report that raised questions about how long the company’s turnaround will take and how strong it will be once it arrives.

Groupon was among the earlier offerings in the current wave of Internet IPOs. Listing at $20 a share in November 2011, the stock shot up to $31 on its first day, a level it hasn’t come close to since. A year later, the stock had fallen as low as $2.60, but a change in CEOs and a shift in its business strategy helped turn things around.

Under its current CEO Eric Lefkofsky, Groupon has made three changes that helped initiate a turnaround: It focused less on the “push” model of daily-deal emails and more on the “pull” model of longer-lasting discounts in a deal database, it moved aggressively into mobile, and it built out growth in Europe and Asia.

Defying skeptics, the moves began to pay off. Groupon began beating Wall Street’s revenue and profit estimates. Hedge funds began buying into its shares. The stock finished 2013 at $11.77 a share, a more than fourfold increase from its 2012 low.

This year, however, Groupon’s stock has lost about half its value amid signs that the turnaround is taking longer, and costing more, than bulls had hoped. In May, the stock fell 21 percent after the company once again beat estimates but warned that the rest of 2014 might be weaker than analysts were expecting. Since then, short interest on the stock has been growing.

Yesterday, Groupon said its second-quarter earnings per share met Wall Street’s forecast of a one-cent-a-share profit and revenue of $752 million, which fell short of the consensus estimate of $762 million. Again, Groupon indicated that the current quarter and the rest of the year would be weaker than Wall Street’s already lowered expectations.

Perhaps more worrisome, some of the warning signs that troubled investors in 2012 are back. In the first six months of 2014, Groupon swung to an operating loss of $28 million, against an operating profit of $49 million in the year-ago period. And the company’s operating cash flow during that period was negative $43 million, against a positive cash flow of $52 million in the same period of 2013.

That metric is important because it suggests Groupon has gone from a company generating cash from its core operations to one that is burning through it. Groupon’s cash on hand dwindled to $868 million from $1.2 billion during the first six months of this year.

Despite the negative cash flow, Groupon spent $106 million to buy back its slumping shares. Lefkofsky also said in a conference call that Groupon took out a three-year, $250 million loan for “additional balance sheet flexibility.”

Groupon is succeeding in its plans to grow its Goods business and to expand abroad, but it’s both of these that are taking a toll on the bottom line. Groupon Goods make up 40 percent of its total revenue, up from 31 percent a year ago. But the higher margin business has helped push operating margins down.

In North America, operating profit fell to 3 percent of revenue last quarter from 13 percent a year ago. In Europe, the profit margin fell to 12 percent from 15 percent. In the rest of the world, where revenue grew 145 percent (thanks largely to the acquisitions of Ticket Monster), the operating loss grew to $18 million.

In some ways, this is the same old Groupon story. The company has been clear from its earliest days it would invest heavily in future growth. The new wrinkle is, while the investments continue, the growth may not be coming as quickly as hoped.

Moving away from daily deals, supplementing local business with goods, pushing into a mobile audience and expanding overseas – these are all defensible growth strategies. Yet Investors are growing wary of Groupon’s ability to deliver on the potential growth of those strategies in the next couple of years.

Like many Internet and e-commerce companies, Groupon is in it for the long run. The company’s Genome, an operating system for local merchants, is intended to make Groupon a major long-term player in commerce as Amazon and eBay are already. As so often happens, turnarounds take time. And profit growth, in the meantime, can start to look like a receding goal.

Kevin Kelleher is a writer living in the San Francisco Bay Area. He has worked at Bloomberg, Wired News and The Industry Standard magazine and has written for Wired magazine, Reuters, Fortune, GigaOm, Popular Science, Salon, Portfolio as well as many others.

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